Himalayan News Service

Surat, June 19:

Ten out of every 12 diamonds sold worldwide are polished in this south Gujarat town but most of the 300,000 artisans engaged in the trade are unaware of the Chinese dragon’s shadow slowly creeping over their heads. “Unlike other industries, liberalisation has taken a long time to make its presence felt in the diamond trade,” Pravin Nanavati, a leading exporter and president of the Surat Diamond Association, said. “Now, no less than 100,000 people are involved in the trade in China and diamond experts from India are being lured to work there,” he pointed out, “China is also encouraging Surat’s unit owners to set up shop there.” Over the past three years, a number of Surat-based units have relocated to China, while others are in the process of doing so. Nanavati perceives China as a growing threat. He believes that while there is no threat in the short term, it is only a matter of time before the Indian diamond industry feels the pinch.

China’s potential is once again an outcome of leveraging its inherent resources. It has the advantage of extremely cheap labour. China scores on the sheer number of people available.

A major catalyst in the change is De Beers, the largest supplier of rough diamonds. India has been a major market for this South African conglomerate. Now, the conglomerate is looking to China to reduce its dependence on India. Diamond merchants say the first signs that China was gaining priority in De Beers’ scheme of operations became obvious some years ago when De Beers’ Millennium boxes — for which the sales promotion competition was held in India — were bagged by Hong Kong for processing. According to industry sources, De Beers has been developing the Chinese market since 1997. The process gained momentum after early 2001, when the first Surat unit shifted there. Since then Russia, Belgium and Israel have also set up units in China.

Industry sources say cheap labour, technological expertise and quality labour are China’s strong points. “Our diamond industry still uses semi-automatic machines,” points out a leading Surat trader. “China’s domestic demand has increased with economic growth and higher incomes,” he adds, “In India, we still have to depend mainly on exports to fuel the demand for diamonds.” Not everyone in Surat is alarmed. Chandrakant Singhvi, regional convener of the Gems and Jewellery Export Promotion Council, feels the Chinese threat is still a speck on the horizon. “Compared to India, China accounts for only a minuscule fraction of the diamond trade,” Singhvi points out.